French Elections Boost
EURUSD is trading higher on Monday with the single currency receiving a double boost from a weaker US Dollar and the surprising outcome of the French elections yesterday. In France, an alliance of leftist parties surged ahead of the far-right National Rally to take power, despite fears of Le Pen’s party gaining control following her first round win. The outcome has been seen as negating the anti-EU risks linked to Le Pen taking power and has helped drive bullish sentiment in EUR at the start of the week. EURUSD is now trading around 1.6% higher from the June lows.
Weaker USD Helps EUR
Along with the bullish sentiment derived from the French elections outcome, EURUSD is also gaining amidst a weaker USD. Friday’s payrolls data showed that while the headline NFP topped forecasts, the prior reading was revised sharply lower. Additionally. Wage growth was seen weakening last month while the unemployment rate was seen rising. The data has seen market pricing for Fed rate cuts this year surging higher. Looking ahead this week, traders will now be watching comments from Fed chairman Powell (Tuesday, Wednesday) alongside the latest US inflation data (Thursday). Any further USD weakness on the back of Powell’s testimony/US data will be firmly bullish for EURUSD near-term. Only a surprise upside reading in Thursday’s US CPI data looks able to help reverse USD selling.
Technical Views
EURUSD
The rally in EURUSD has seen the market breaking back above the 1.0724 level with price potentially carving out a large double bottom. With momentum studies turning higher, focus is on a continuation higher and a test of the 1.0937 resistance next, with the bull channel highs around that level also. This will be a key test for bulls, opening the way for a rally towards 1.1126 is broken. In the signal centre today we have a buy limit at 1.0822 suggesting a preference to stay long here.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.